1. Field of the Invention
The present invention generally relates to component based business models and, more particularly, to using a component business model as a basis for developing a service, system and method for an improved automotive warranty claims process.
2. Background Description
Across the automotive industry escalating warranty costs are consuming significant revenue from manufacturers and suppliers alike. In North America, the automotive industry spends nearly 3% of its revenue on warranty claims, totaling nearly $8 Billion in 2003. Further, warranty costs per vehicle are rising, in part because of an increasing percentage of in-vehicle software and electronics and greater complexity associated with increased reliance upon systems and modules rather than components.
Original equipment manufacturers (OEMs) in the automotive industry have developed point solutions to address certain issues. New call centers have been set up; systems to track claims have been implemented; new reports have been developed to identify problems and issues that have already surfaced. These solutions do not take into consideration the impact of warranty claims on all parts of the organization (including product design, development, build, sales and service). Warranty issues ultimately affect almost all major parts of the automotive business, and if not monitored, managed and addressed appropriately, result in significant impact to the bottom line.
A primary factor that influences overall warranty costs is the length of time from initial problem report to root cause identification to corrective action. Warranty claim resolution under the prior art typically takes more than 160 days. Because faster resolution results in fewer claims for a given problem and lower overall warranty costs, cycle time improvement represents a major financial opportunity for automotive companies.
Most automotive companies are painfully aware of these constraints but continue to struggle with warranty administration hurdles that constrain information sharing among OEMs and suppliers and delay problem diagnosis. Automotive companies are often unsure where to start their transformation effort, which organization is accountable and which warranty administration changes will have the most impact on their businesses.
What is needed is a methodology that enables an automotive company to take a strategic, enterprise-wide view of their organization to address warranty challenges.